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Crypto firms suspend withdrawals as FTX crumbles

Friday was the last day FTX saw daylight, with the exchange along with its 134 affiliated firms filing for bankruptcy projection and CEO Bankman-Fried resigning. Whatever’s left of FTX is now under John Ray III. This collapse of a multi-billion dollar exchange has left the crypto industry in havoc. 

Following FTX’s filing, crypto trading platform BlockFi suspended withdrawals, stating a lack of clarity on FTX, FTX US and Alameda’s status. AAX followed suit, although they stated, “withdrawals have been suspended to avoid fraud and exploitation”. The firm reportedly had scheduled an update to its systems for better protection against malicious attacks and fraud but changed its mind and limited its services to “prevent further risks”.

FTX’s shutdown has been a major loss for many people in the crypto space. Cryptocurrency fund Ikigai reported losing an undisclosed amount of investors’ money in FTX. Crypto platform Hbit Limited reported being unable to withdraw nearly $18 million, including $13.2 million in customer assets, in crypto funds from FTX. 

Outside of losses to the exchange itself, Bankman-Fried and investors, including the SoftBank Group and Sequoia Captial, among others, individual customers can also lose funds. Sequoia even went as far as writing off its $150 million investment in the company because of a solvency risk, effectively marking out its investment to zero.

FTX did have some hope after Binance CEO Changpeng Zhao said that he was looking into acquiring FTX. However, Binance pulled out of the deal after due diligence, stating that the problems at FTX were beyond their control or ability to help.

To make matters worse, FTX is also reportedly under investigation by the US Securities and Exchange Commission (which is also looking at Binance and Coinbase Global) and the Department of Justice.

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